New Delhi can't drop the ball on the art of the New Deal

In a strategic pause on May 12, the US and China resolved to reduce tariffs on their goods temporarily, taking a new turn in the escalating trade war between the two.

- Harsh V Pant

The new rates came into effect on Wednesday. Additionally, a mechanism to deliberate over economic and trade relations will be set up, with Chinese vice-premier He Lifeng, US treasury secretary Scott Bessent, and trade representative Jamieson Greer spearheading the talks.

China pledged to revoke non-tariff countermeasures—a reference to the curbs on the export of critical minerals used in the manufacturing of batteries and other advanced applications.

The aim of this pause seems to be to finalize the contours of a broader agreement in due course.

Earlier, US President Donald Trump's America First trade policy released in January sought to probe China's practices related to technology transfer, infringements of intellectual property, steering of exports through third countries, and discriminatory trade practices.

Bessent has said Washington was keen to discuss the issue of trade deficit, China's currency tweaking, and subsidies for manufacturing.

These issues are set to prominently figure in the talks that will take place over the next three months.

Both sides have skin in the game and would seek to defuse trade tensions.

For Washington, the spectre of shortages due to the imposition of high tariffs loomed large.

Besides, small firms in the US faced significant challenges with respect to reworking supply chains amid the tariff tussle.